It’s been 10 years since the world was on the brink of an economic meltdown, but while markets and many businesses have long since recovered, one area appears to be struggling still: real salaries for professionals young and old across the world.
According to a new analysis by Korn Ferry, average, entry-level professionals, mid-level professionals, and senior managers are earning less, after inflation, than they were in 2008. In all, the study reviewed salary data from 19 economies across the world, zeroing in three job categories. While salaries did grow on a dollar basis, much of the gains were canceled out by growth of inflation.
“The wage stagnation phenomenon has really been global,” says Ben Frost, who leads Korn Ferry Hay Group’s global Reward Products business. The salary data doesn’t account for other forms of compensation, such as stock options.
Indeed, those hit hardest are people with professional entry-level roles. In the United States, workers who made $100 in 2008 are making less than $98 now. Other entry-level workers fared worse; Brazilians are effectively making 22% less than they were 10 years ago, Indians 26% less, and Russians 28% less. In fact, of the 19 economies Korn Ferry researched, only Chinese entry-level workers are making more, on an inflation-adjusted basis, than they were 10 years ago.
People in the middle of their careers have mostly tread water. Mid-level professionals in eight countries were getting more real pay than 10 years ago, while those in 11 others were making slightly less. American mid-level professionals are getting paid about 2% more, after inflation, than they were a decade ago.
Senior managers across the world, with a few exceptions, did see their real pay rise. Thirteen of the 19 economies saw real pay grow, with Chinese senior managers seeing a 13% growth since 2008. American senior managers saw real pay rise about 6%. The reason for the gains is that there still is a scarcity of top-tier talent, Frost says. Nevertheless, the declines in real salaries in six countries—Turkey, Russia, Indonesia, Italy, Argentina, and Brazil—brought the entire average down. All of those countries, it bears noting, have had political upheaval, economic crises, or both since 2008.
The big question for leaders, however, is whether the era of stagnant real pay will last? For his part, Frost says no. “We are quite close to full employment, and it is getting hard to fill positions,” Frost says. “The obvious implication is that wages are going to go up because they are going to have to.”
Just raising wages, however, may not be enough in an employees’ job market to keep workers engaged. “The key is understanding what an employee wants, and perhaps giving them a whole suite of benefits to choose from,” says Cynthia Stuckey, a London-based senior partner with Korn Ferry.